Income tax in India being reduced to “almost zero” is highly unlikely, Union Finance Minister Nirmala Sitharaman explained during a speech at the Indian Institute of Science Education and Research (IISER) in Bhopal. While she expressed a wish that taxes could be significantly lowered, she emphasized that India’s substantial economic challenges make this impossible at present.
The country requires substantial funds to address various issues, including research and development, meeting climate goals, and transitioning to renewable energy.
Sitharaman, who recently presented the 2024 Union Budget, was criticised for not offering significant tax relief to salaried individuals, aside from a 50 percent increase in the standard deduction under the new tax regime. She explained that while she understands the desire for lower taxes, the government needs to generate revenue to tackle the pressing challenges India faces.
In her speech, Sitharaman highlighted the financial requirements needed to meet India’s climate commitments, such as those made at the COP 21 and COP 27 conferences. She noted that while the international community promised financial support for the transition from fossil fuels to renewable energy, India has largely funded these efforts independently.
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The Union Finance Minister also urged the graduating scientists at IISER to contribute to India’s progress by developing and patenting new climate-friendly technologies. She stressed the importance of these innovations not only for scientific advancement but also for societal benefit.
Sitharaman’s budget proposals included adjustments to income tax slabs, particularly under the new tax regime, where the standard deduction was increased, allowing salaried individuals to save up to Rs 17,500.
However, she faced the challenge of balancing the need to stimulate economic growth while providing tax relief, all within the context of an ambitious fiscal plan that projected an 11.46 percent growth in gross tax revenue for 2024-25.
In summary, while the idea of drastically lowering income tax is appealing, the financial demands on the Indian government make it an impractical goal in the near future. The focus remains on managing these challenges while fostering growth and innovation.
